The rumor dujour. Have also heard that GDT/CTSI in talks related to patents that CTSI currently holds, and GDT either wants them and/or is infringing on. Hmmm...
DJ Cardiothoracic Sys Up 14% On Takeover Speculation
By Kopin Tan and Raymond Hennessey
NEW YORK (Dow Jones)--Cardiothoracic Sustems Inc. (CTSI) posted large
stock gains for a second day in a row, and market sources attributed the jump to speculation that the Cupertino, Calif., company is in talks to be acquired by Guidant Corp. (GDT).
Most recently on Friday, Cardiothoracic Systems - a market leader in
the minimally invasive cardiothoracic surgery niche - gained 2 3/4, or 18%, to 18 on volume of 169,400 shares, more than twice the daily average volume of 76,695. At one point, the stock reached 18 5/16, a 52-week high.
This followed an 8% rise Thursday when 291,400 shares changed hands,
nearly four times the daily average volume.
A Guidant spokesman declined comment, citing company policy. Officials at Cardiothoracic Systems did not immediately return calls Friday.
A number of analysts contacted by Dow Jones said they had not heard of
the market rumor, but
most said they were not surprised by the linking of the two names.
Cardiothoracic Systems, which has a market capitalization of about $240
million, develops and
manufactures disposable instruments and systems used in minimally
invasive cardiothoracic surgery.
"Guidant is unequivocally the pre-eminent property at this point in the
minimally invasive cardiac
surgery sector, with over 50% market share in the beating heart segment
of the business," said Archie
Smith, a managing director and senior research analyst at US Bancorp
Piper Jaffray.
Since it went public in 1996, the company has developed its business to
a point where procedure
volume and product acceptance are high and where technical risks
appears to have abated
somewhat, said Sanjiv Arora, an analyst with Dain Rauscher Wessels,
which recently upgraded
Cardiothoracic Systems to a buy rating.
Meanwhile, industry observers say Guidant has made no secret of its
plans to increase its presence in
the cardiac surgery area. The Indianapolis company - formed when Eli
Lilly & Co. (LLY) spun off its
medical devices business in 1994 - already has a world-wide business
making cardiovascular
therapeutic devices, including pacemakers and cardioverter
defibrillators, and intervention products
that help open blocked arteries.
Acquiring Cardiothoracic Systems would give Guidant greater market
share in the minimally invasive
cardiac surgery niche and would be a logical extension of its
considerable heart-related business.
Jonathan Osgood, a managing director and health-care analyst at
Deutsche Banc Alex. Brown, said
Guidant has demonstrated its interest in the interventional cardiac
surgery sector and has recently
reorganized its Origin Medsystems unit to give it a greater
cardiovascular focus.
Guidant earlier this month sold its general surgery business -
including assets and product lines from
Origin Medsystems - to Tyco International Ltd.'s (TYC) United States
Surgical division, but retained
the cardiac surgery products and applications.
Cardiothoracic last week reported second-quarter results that included
sales of about $7.33 million
and net loss of about 15 cents a diluted share, compared with a
42-cent-a-share net loss from the
same period last year.
Most recently on Friday afternoon, Guidant lost 1 13/16 or 3% to 58
11/16 on volume of 423,900
shares, compared to daily average of 1.55 million. Cardiothoracic
Systems most recently was up 1
11/16 or 11.1% to 16 15/16 on volume of 271,100 shares |
